Reasons why the Pennsylvania Liquor Control Board should be abolished, and The Almighty Liquor Code completely overhauled and rewritten, to reflect over 80 years of change since Repeal.

Tuesday, January 10, 2017

This will only hurt a little bit, we're just flexible pricing.

On January 1st, the PLCB raised the price of 341 bottles of Booker's Bourbon from $59 to $99.99, a 66% increase. Bottles that they already had in stock on the shelves across the state. Bottles that they had already bought and paid for at a lower price. This was in anticipation of the published March or April price increase by Jim Beam on NEW product.

However, Beam didn't increase the price to $99.99 due to consumer pressure and outrage, They decided that an increase to $69.99 would be enough at the moment, and changed their minds before the actual price increase took effect. So how come the PLCB price went to $99.99 anyway?(Update: the PLCB has belatedly lowered the price to $69.99...but you are still paying more for bottles they bought at a lower price.)

The PLCB excuse was that they raised the price for Booker’s to $99.99 on January 1 “at the request of the
vendor,” according to PLCB spokesman Shawn Kelly. I'd like to see that in writing. Remember: Beam gets no benefit from an immediate price increase, so what the PLCB is saying is that Beam told them, 'Hey, fine. Screw your citizens by raising the price across the board, limiting sales and competitive pricing of our product so you can make more money in your little monopoly.'

There are two factors at work here, a desperate desire to maximize 'profit,' and lack of any consumer protection and overwatch. The PLCB used to brag about how they controlled price increases, saying that industry instituted more increases then they had, but now increases are seen as a way to make more money for the state by gouging the consumer.

How does that work? Say Bottle "A" sold on the shelf for $25 before "Flexible Pricing;" the PLCB paid about $14.50 for it before all the taxes, fees, markups and rounding they add. Now, with "flexible pricing," the bureaucrats decide to negotiate to try and save themselves some of that money. (Negotiating is something they could have been doing all along when it would have benefited the consumer, but they chose not to. But now it benefits the PLCB, so full speed ahead, boys!)

Back to the example. The PLCB knows that another state's monopoly system only pays around $12.30 for the same bottle. They've known for decades that other states pay less, and decided not to do anything about it. There was a conscious decision that having a lower price yet selling more product to increase overall sales was not something the PLCB wanted to do. Too much work selling that extra amount of product for that sales increase, apparently. Yet, keeping the same price, selling the same amount, and gouging the consumer by not passing any savings along when producers offered deals was decided to be perfectly acceptable.

The PLCB now manages to get $1.50 shaved off of the wholesale price. To make sure that the same amount of taxes are collected, they increase the markup from what used to be a standard 30% to nearly 47% to reach the same point to apply the 18% Johnstown Flood Tax. The consumer sees NONE of the price reduction from the agency's "buying power." The state doesn't collect any more taxes, but the PLCB gets to say they are making more money, and they cover their ballooning operating expenses for another few years. Remember: the amount the state gets by having the PLCB in the middle is less than they would get if taxes were raised by the same amount. The cost to the consumer is the same. In other words, we get to pay more to keep the PLCB jobs program afloat.

Here's another example of the "benefit" of flexible pricing: sale items. The PLCB itself doesn't put anything on sale, other than closeouts (of items they can't be bothered to sell), and out of season items ,like the Christmas gift packs that are on sale now. Everything else that you see a sale tag on is a reduction from the producer. Formerly, the PLCB had to pass on those reductions to the consumer; that was the law (and a good law to keep a monopoly in check). What they can do now is "recapture" some of that savings that was supposed to go to you, the consumer, through the magic of "flexible pricing."

Here's how that works. Suppose a distillery offers a $5.00 off special to the PLCB. Used to be that the PLCB approved the sale, printed up sale tags, and the citizens got to pay closer to what some other places charge. But under the new "modernization" law, "flexible pricing" allows the PLCB to decide that they don't want the citizens to have $5.00 off, that $3.00 off is good enough ("Good enough" should be their agency-wide motto), so they take the full $5.00 discount from the producer, print up sale tags for $3.00 off, and they keep the other $2.00 - such a deal! Doesn't that make you feel good about "modernization"? Don't you wonder what rat hole your two bucks is going down?

PLCB apologists will point out that private business can and does do the same thing. Sure, they can, but there is one thing that keeps that in check: competition from other businesses. If you decide to keep that extra $2.00, but your competition down the street (remember, private liquor sales means a "alcohol on every street corner") doesn't, and guess who will have more sales? But pass on some of that wholesale price reduction to your customers, and who will have more repeat business?

This is the heart of it. The total lack of competition in Pennsylvania is why we pay more, why we have less convenience, why we have less selection, and why we don't have the same protection from price gouging the free market provides. Don't like what the State Store System has, at the price they charge? Screw you, you have no choice. But if you're in a free state, and you don't like what Bob's Liquor has at the price they charge? You can just go somewhere else where the selection or prices are better.

This lack of choice will always make the citizens serve the needs of the PLCB instead of them serving the needs of the citizens.

Four new bills from the House to tear down the PLCB's Wall. What will happen to them?

Needed: passion for privatization

"...there was [in 1997] no overarching passion within the General Assembly, or in the public at large, for privatization. Unless and until there is a general hue and cry, it is very unlikely there will be a privatization initiative that succeeds." -- John E. Jones III, former PLCB chairman

If you've got your own reasons...

Send them to me. I'd love to hear from you, and take those ideas and blend them with mine. And if you're in favor of the continuing existence of the PLCB, well, send me that, too. If it makes sense, I'll publish; if it doesn't, I'll publish it also, but I may have to disagree with you.

Privatization's in play: what are your biggest concerns?

If the Legislature ignores the will of the citizens and goes the "modernization" route...what would you most like to see change with the State Stores?

Why do you buy booze in other states?

What I like most about the PLCB is:

The first thing I'd change in the Pennsylvania Liquor Code is:

When I buy wine at a Pennsylvania State Store:

When booze sales are privatized in PA, State Store clerks can be:

The wine and spirits selection at the State Stores is actually better than at the average "liquor store" in other states. This makes me feel like:

What factor is most likely to block any meaningful reform of Pennsylvania's Liquor Code?

If the legislature suddenly did away with the case law tomorrow, and any distributor, bar, or tavern could sell any amount of beer they wanted to, the most likely unintended consequence would be:

Polls show that over 80% of Pennsylvanians are opposed to the case law -- even MADD doesn't support it -- yet a six-pack sales bill still languishes in the Legislature after over a year. Why do your elected representatives continue to thwart your wishes?

What do you think of the proposed new name for the State Stores: Table Leaf?

Which PLCB gaffe really pissed you off over the past two years?

Blame the PLCB, the Legislature, or Rendell: things seem to disappear around the PLCB. Which one of these do you miss the most?

I buy beer at Pennsylvania supermarkets because:

The new wine kiosks are

The most important reason for liquor store privatization in PA is:

Why won't you write to your state reps to tell them you're in favor of privatizing the State Stores?

What aspect of the PLCB's "Anything But Privatization!" program sounds most ridiculous?

PJ Stapleton and Joe Da CEO have presided over an incredible festival of FAIL. As PA taxpayers, we are the 'shareholders' of this 'business.' How do you vote?

HB11, the current proposal for privatization, has serious flaws. How do we proceed?

Are you going to stop buying your booze in the State Stores and take privatization into your own hands?

Governor Corbett's supposed to be working on a new privatization bill. What is the most important piece of that bill for you?

Why do you think the PLCB created their house "Table Leaf" wine brand?

Will Joe Conti still be PLCB CEO by next spring?

The Pennsylvania State Stores should be replaced by:

What is your opinion on Governor Corbett's privatization plan?

If you could hit the re-set button and set up booze sales any way you like in the Commonwealth...what would you do?

How about we talk about that Police-Enforced Monopoly. Got an opinion?

When the Senate finally moves on privatization, they'll most likely

To get any privatization, we need to get a bill through the Senate, agreed to by the House, and signed by Corbett by 6/30. What's most likely?

Politics and general dysfunctionality of the Legislature has delayed a vote on privatization. Will anything happen in the brief Fall Session?

New Democratic Governor, Republican Legislature...what's that mean for liquor privatization?

The House & Senate are moving to normalization. What might Gov. Wolf NOT veto?

After The Veto...are things over?

What should the GOP majority offer Gov. Wolf in exchange for liquor normalization?